“How much do I need to retire?” is really three questions: how much will you spend, which income sources will cover that spending, and how large a portfolio do you need so withdrawals stay sustainable. No single number works for everyone. A transparent plan beats a viral rule of thumb.
This guide frames the pieces and shows a worked projection from our retirement calculator, which compounds contributions monthly and illustrates a first-year withdrawal at a 4% rate.
Start with spending, not with a nest-egg slogan
List the annual budget you want in retirement: housing, food, health care, travel, taxes on withdrawals and the rest. Many people spend less than their working-years gross income; some spend more in early retirement. Separate needs from nice-to-haves, and note which costs might fall (commuting, payroll taxes on wages) or rise (medical care, family help).
Convert today’s budget into future dollars with a realistic inflation assumption, or work entirely in today’s dollars and deflate the portfolio the same way. Our retirement calculator reports both a nominal balance and a balance in today’s dollars using the inflation rate you enter.
Social Security is one income source — not the plan
Social Security retirement benefits can replace a meaningful share of wage income, especially for lower and middle earners, but the exact benefit depends on your earnings history and claiming age. Create or sign in to your my Social Security account on the Social Security Administration site for a personalized estimate. Do not invent a benefit figure for planning if you have not checked.
Treat the SSA estimate as a floor of income. The portfolio has to cover the gap between that floor and your spending target, with a cushion for longevity and market risk.
Withdrawal rates and what the Trinity study showed
The so-called 4% rule traces to research often called the Trinity study — Cooley, Hubbard and Walz (1998), published in the AAII Journal. They examined historical US market returns and asked which initial withdrawal rates, adjusted for inflation, lasted for multi-decade retirements in their sample. A 4% initial withdrawal from a diversified portfolio was associated with high success rates over the periods they studied for certain stock/bond mixes.
What that study did not do:
- Guarantee results for the future
- Model every fee, tax or sequence-of-returns path you might face
- Replace advice for someone with a pension, concentrated stock, or a very long planning horizon
Our calculator uses a 4% first-year withdrawal only as an illustration of how large a balance translates into an income stream. It is a planning lens, not a promise.
Inflation and the length of retirement
A 30-year retirement at 2.5% inflation roughly doubles many price levels. A portfolio that looks large in nominal dollars at retirement buys less than the headline suggests. That is why the calculator also shows balanceToday and withdrawal amounts in today’s dollars.
Longevity matters as much as inflation. Planning to age 95 is a different problem from planning to age 80. Erring toward a longer horizon usually means saving more, spending more carefully, or both.
A worked accumulation example
Defaults in the retirement calculator:
- Age 35 → retire at 67 (32 years)
- Current savings $50,000; salary $75,000
- Contribute 10% of salary; employer matches 50% of the first 6%
- Salary grows 2% a year; portfolio returns 7% a year; inflation 2.5%
On those assumptions the projected balance at 67 is about $1.81 million nominally, or about $821,000 in today’s dollars. A 4% first-year withdrawal is about $72,400 nominally ($6,033 per month), or about $32,900 a year in today’s dollars. Total employee contributions over the years sum to about $332,000; employer match about $99,500; the rest is growth.
Change the contribution rate, return or retirement age and the ending balance moves quickly — which is the point of modeling. Pair this with the compound interest calculator if you want a simpler deposits-and-growth view without salary growth and match rules.
Contribution limits to keep in view
For 2026, the IRS elective deferral limit for 401(k)-style plans is $24,500, with catch-up contributions available for participants age 50 and older (and a higher catch-up for ages 60–63 under SECURE 2.0). Overall annual additions to a participant’s account have a separate, higher limit. Confirm current figures on the IRS contribution-limits page cited in the sources; plans can impose lower limits.
Put a plan on paper
- Write down a retirement spending target in today’s dollars.
- Subtract expected Social Security (from SSA) and any pension.
- Decide what withdrawal rate you are willing to assume and back into a portfolio target.
- Use the retirement calculator to see whether your savings rate, match and timeline reach that target.
- Revisit after raises, job changes or large market moves.
Retirement math is sensitive to inputs. Make the inputs honest, keep the withdrawal rule in its historical context, and let the calculator show the gap while you still have years to close it.